September 8, 2010 - Demand for cigarettes has soared ahead of the scheduled tobacco tax hike on October 1, 2010 and tobacco companies and convenience stores are trying to cash in as consumers stock up before prices rise.

Plans are being made for after the tax hike as well--drugstores are expanding their lineup of products to help people kick the habit, while Japan Tobacco Inc. (JT) plans to remodel its products to prevent a sharp decline in sales.

The upcoming price increase will be the largest ever for cigarettes in this country. JT expects cigarettes sales in September to be double the average amount for that month.

Sales are expected to peak in late September, when many company employees receive their salaries at the end of the month. Tobacco manufacturers and retail shops are promoting cigarette sales. Convenience stores are particularly desperate, as cigarettes are one of their major sources of revenue. "[Sales of cigarettes] account for about 22 percent of our total sales," an official of FamilyMart Co. said.

To prevent its stock from running out, Circle K Sunkus Co. is distributing leaflets urging consumers to make reservations to buy cigarettes. However, the current surge in demand may eat into future demand, and tobacco-related industries are concerned cigarette sales will drop sharply after the tax hike.

Based on overseas examples of tobacco tax hikes, JT projects cigarette sales will drop by 25 percent over the year through the end of September 2011 from the previous year. Many people also buy coffee, alcoholic drinks or magazines when they purchase cigarettes at convenience stores, so these retailers fear lower cigarette sales may affect their overall performance.

Some convenience stores are preparing to sell candy and chewing gum at a discount, believing smokers will substitute such items for cigarettes.

JT also plans to develop new products, following the success of the company's popular Zero Style Mint smokeless tobacco, which has been in short supply due to its extreme popularity. (Japan Tobacco, Inc. Zero Style Mint, company says it is selling well..)Antismoking goods also strong.. The scheduled tobacco tax hike has given a boost to businesses targeting people trying to quit smoking. At Sugi Holdings Co., a major drugstore chain headquartered in Aichi Prefecture, sales of nicotine gum and e-cigarettes increased 50 percent in May and June from the same period last year.

An increasing number of customers have asked store clerks about effective ways to stop smoking, the company said. In response, Sugi Holdings plans to have pharmacists offer counseling services in some of its stores in Osaka and Aichi prefectures for people who want to quit smoking.

In late August, Tokyo-headquartered Cocokara Fine Holdings Inc., which operates the Seijo chain of drugstores, set up a section for nicotine gum and other smoking cessation aids in some of its major stores.